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2018 (8) TMI 1200 - ITAT BANGALOREUndisclosed income - admission of declaration of income during survey u/s 133A - Held that:- the statement recorded u/s. 133A of the Act de hors incriminating material found at the time of survey cannot be the basis to make any addition. In other words, there should have been evidence found which can lead to the conclusion that assessee has suppressed income. In the present case, no such exercise has been carried out by the AO or the CIT(Appeals). In the course of survey u/s. 133A of the Act, the inventory has to be compared with the stock as per the books of account. While arriving at the value of inventory, the cost price has to be determined and due deduction given towards direct expenses. In other words, if the stock found at the time of survey carries a tag of sale price, then to arrive at the purchase price of the assessee, gross profit margin as declared in the relevant assessment year and direct expenses have to be reduced. Only then the value of inventory at the time of survey can be ascertained. If the inventory is more than the value as recorded in the books of account, then addition u/s. 69 as unexplained investment in stock has to be made. If there is a shortfall, then the presumption is that the assessee has sold goods outside the books of account and then appropriate profit margin has to be added to the total income. Without following the procedure which is normally adopted in the case of a survey, the AO cannot be allowed to make additions - Decided in favor of assessee.
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